THE FEDS $8000 TAX CREDIT
The American Recovery and Reinvestment Act of 2009 authorizes a federal tax credit for up to $8000 when you purchase a home before December 1, 2009. Whether the buyer is an individual or a married couple, they qualify for the same amount. One exception to that is if the buyer is married and buying a home as an individual. In this case the individual only receives a $4000 tax credit.
Couples qualify for the tax credit if they have income of $150000 or less. A single individual has to have income of $75000 or less. If in either case their income is greater than the amounts shown, they get only a percentage of the $8000 tax credit.
There are other provisions in the Act to be aware of. You have to be a first time buyer. If you haven’t owned a home in three years, you qualify as a first time buyer. The amount of your credit depends on the price you pay for the home. The credit is 10% of the price up to $80000. If you purchase a home for $50000 you would receive a tax credit of $5000 not $8000. If you buy a home for more than $80000, you will only receive the $8000 tax credit and not 10% of the purchase price.
Some lenders are allowing you an opportunity to use the tax credit to help pay for closing costs or buy down the interest rate. A personal loan or bridge loan is set up at the beginning with the buyer using the tax credit to repay the borrowed funds.
There are many reasons to consider purchasing a home now. Contact your real estate agent to get good information on buying a home before December 1st.